Affirmative
Insurance Holdings, Inc.
4450 Sojourn Drive
Suite 500
Addison, Texas 75001
|
|
|
|
|
|
|
|
|
Re:
|
|
Second Amendment to
Credit Agreement and Waiver
Credit Agreement dated as of July 30, 2004 (such agreement,
together with all amendments and restatements, the “
Credit Agreement ”), by and among Affirmative
Insurance Holdings, Inc., Affirmative Insurance Company, Insura
Property and Casualty Insurance Company, and The Frost National
Bank, as Administrative Agent, Lender and L/C Issuer
|
Capitalized terms
not otherwise defined in this Second Amendment to Credit Agreement
and Waiver (“ Second Amendment ”) have the
meaning specified in the Credit Agreement.
By your execution
of this letter, you agree to as follows:
1.
Amendment to Credit Agreement Section 1.1 . Credit
Agreement Section 1.1 is amended by adding the
following in alphabetical order:
“
Policy Fees ” means (a) if the calculation is
made as at the last day of the first three fiscal quarters of a
RIC, the amount of policy fees for the four fiscal quarters of such
RIC ended as at such last day, computed using the same information
and in the same manner (except that such computation shall be for
the preceding four fiscal quarters) as was utilized in preparing
page 4, line 13 of the regulatory financial statement of such RIC,
utilizing the format promulgated by NAIC and filed with the
applicable Insurance Regulator, or if such format is changed after
the Agreement Date, the same type of information, computed in the
same manner (except that such computation shall be for the
preceding four fiscal quarters), as contained on page 4, line 13 of
such regulatory financial statement of such RIC dated
September 30, 2004, or (b) if the calculation is made as
at the last day of the fiscal year of a RIC, policy fees as shown
on page 4, line 13 of the regulatory financial statement of such
RIC as would be prepared for such period utilizing the identical
format promulgated by NAIC and utilized by such RIC in preparing
the December 31, 2004, annual statement filed with the
applicable Insurance Regulator, or if such format is changed after
the Agreement Date, the same type of information, computed in the
same manner, as contained on page 4, line 13 of such regulatory
financial statement of such RIC dated as of December 31,
2004.
2.
Amendments to Credit Agreement Section 1.1 .
(a) The
definition of “ Expense Ratio ” is deleted in
its entirety and the following is substituted in lieu
thereof:
“
Expense Ratio ” means the ratio of (a) Expenses
Incurred to (b) the sum of (i) Premiums Written, plus
(ii) Policy Fees.
(b) The definition
of “ Loss Ratio ” is deleted in its entirety and
the following is substituted in lieu thereof:
“ Loss
Ratio ” means the ratio of (a) Losses Incurred to
(b) the sum of (i) Premiums Earned, plus (ii) Policy
Fees.
3.
Amendment to Exhibit H (Compliance Certificate)
.
Exhibit H to the Credit Agreement is deleted in its
entirety and a new Exhibit H , in the form of
Exhibit H hereto, is substituted in lieu
thereof.
(a) Borrower has
delivered to Administrative Agent a copy of Borrower’s
Form SC 14F1, filed with the Securities and Exchange
Commission on October 28, 2005 (such filing, without giving
effect to any amendment, restatement or superceding filing, the
“ Form 14F1 ”). As described in the
Form 14F1, Lucius E. Burch, III, Mark E. Pape and Mark E.
Watson, Jr. will resign as members of Borrower’s Board of
Directors, Borrower’s Board of Directors will be increased by
two members, and Kevin R. Callahan, Nimrod T. Frazer, David L.
Heller, Avshalom Y. Kalichstein and Michael J. Ryan will be
nominated to Borrower’s Board of Directors (such
transactions, together with the election of the five nominated
directors, the “ 2005 Board Changes
”).
(b) The 2005 Board
Changes will result in a Change of Control.
Section 9.1(k) of the Credit Agreement provides that a
Change of Control is an Event of Default.
|
